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Viewpoint – November 2023

Following a bruising 3 months, equity and bond markets came back with a bang in November, in most cases recovering all the ground lost since July, in an almost unbroken run of gains through the month. The extraordinary shift in risk appetite saw global developed world equities return 9.4% in the month, with US markets producing among the best returns in local currency terms, +9.1%, while dollar weakness pushed non-US markets to even higher returns in USD terms. The Chinese market also rallied, but by a modest 2.5%, continuing its sharp underperformance this year.

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Global Matters Weekly – Wall-E Street

The big story this year not only in equity markets but also in society has been Artificial Intelligence’s (AI) dramatic entrance onto the stage. Since then, a deluge of headline-grabbing commentaries have flooded in, speculating on various implications of this new technology. The mania left me with some concerns, and whilst predicting the end of life on earth is perhaps beyond my pay grade, I have written some thoughts down on AI’s role within the investment management industry and whether I should start looking for a new job.

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Global Matters Weekly – Fleece Navidad: Falling out of fast fashion

As we approach Christmas Jumper Day this week in the UK, I find myself sifting through the depths of my wardrobe, searching for festive knitwear to raise money for Save the Children. The promise of chilly winter evenings and cosy Christmas gatherings tempts me to add yet another festive jumper to my collection, despite the fact that I already own enough to dress a small woolly army.

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Global Matters Weekly – Siren Call

I recently returned from a client trip to Asia, during which I visited Hong Kong for the first time. The ‘Fragrant Harbour’, to coin its literal name. From my short time there I found it to be a fascinating and vibrant melting pot of ‘East meets West’, with a can-do and pro-business attitude. Yes, the city has witnessed major politically motivated unrest and change in recent years, which has undoubtedly had knock-on effects, but as an outsider visiting for the first time, I could feel the city’s welcoming energy.

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Global Matters Weekly – Stocking fillers for your portfolio

It’s that time of year again where Mariah Carey and Michael Bublé are defrosted for their annual appearances and Coca-Cola’s Christmas truck graces our cities. What a wonderful time of the year, and with growing belief that we have seen ‘peak rates,’ along with encouraging inflation data where should you look to spread Christmas cheer to your investment portfolio? These portfolio stocking fillers will hopefully bring you joy over the next few years.

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Global Matters Weekly – Interest rate volatility: Transitory or here to stay?

Following the start of the US Federal Reserve’s belated rate hiking cycle in March 2020, this year has seen a marked pickup in interest rate volatility and a significant increase in the benchmark 10-year yield in recent months, which have contributed to broader economic uncertainty. So, what exactly has been driving this volatility and is this trend going to reverse anytime soon?

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Global Matters Weekly – Use it or lose it

As we bid farewell to another Rugby World Cup, I am reminded how my own rugby playing days are barely visible in the rear-view mirror. As a ‘forward’ I would frequently hear shouts from the referee of “Use it or lose it” if we didn’t pass the ball out quick enough to the ‘backs’ once it had emerged from a scrum or ruck. Wasting the opportunity to use the ball, being penalised and conceding possession to the opposition is no way to win a match.

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Global Matters Weekly – Treasury hunt

While the world’s attention has been focussed on the horrific events in Israel and Gaza, the storm brewing in bond markets reached a new intensity, with the yield on the US 10-year Treasury bond this week crossing a milestone of 5%, the highest since before the Global Financial Crisis (GFC). This matters a great deal to financial markets globally, its impact shouldn’t be underestimated. US Treasuries are the world’s greatest safe-haven asset, and the 10-year yield is the world’s discount rate. When it moves sharply, as now, it reverberates globally and immediately.

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Global Matters Weekly – Base effects

Our everyday lives involve countless decisions made under uncertainty. Incomplete, complex, and often conflicting information can steer our thinking away from crucial underlying factors that are likely to be more beneficial inputs into decision making. One such input are base rates, which can repeatedly be ignored when we perceive new information to be more relevant to our individual situation.

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Global Matters Weekly – Fly me to the Moon

The term “irrational exuberance” was popularized by former Chairman of the US Federal Reserve, Alan Greenspan, when he referred to the ebullient behaviour of investors towards internet stocks in the mid-1990s. Such behaviour ultimately led to the ‘Dot-Com Bubble” and subsequent stock market crash in the early 2000s. Investors rarely seem to learn from past booms and busts, and we frequently observe evidence of irrational exuberance across all asset classes.

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